DTN Early Word Livestock Comments

Cattle: Steady Futures: Higher Live Equiv: $282.28 +$5.76*

Hogs: Higher Futures: Mixed Lean Equiv: $120.65 -$4.39**

*Based on the formula estimating live cattle equivalent of gross packer revenue. (The Live Cattle Equiv. The index has been updated to depict recent changes in live cattle weights and grading percentages.)

** based on formula estimating lean hog equivalent of gross packer revenue.

GENERAL COMMENTS:

You just cannot keep a good market down. Cattle are following a similar pattern as they did about 1 1/2 weeks ago when the market broke. The results were new contract highs again. It is uncertain whether a similar pattern will unfold, but it appears that may be the case. Demand has not slowed as boxed beef prices surged Tuesday, with choice up $9.06 and select up $6.03. The past few weeks of reduced slaughter certainly accomplished what was intended by sharply increasing boxed beef prices. However, packers may have to step up this week to increase bids to obtain cattle, as they may be short-bought due to continued strong demand. USDA significantly raised its estimates for cattle prices on the WASDE report for this year and next, with the average price for steers higher in 2026 than the average for this year.

Hogs did not share the same sentiment as cattle, with pork cutouts down sharply, posting a decline of $4.39. Significant losses were in the main categories except for ribs. USDA was not so generous in its estimate of hog prices, showing only slight gains for the rest of this year and 2026. Packers were aggressive buyers in the country, with the National Dairy Direct Afternoon Hog report showing a gain of $4.16. Packers are not expected to be aggressive Wednesday as they monitor the potential for demand.

	BULL SIDE		BEAR SIDE
1)	The surge in boxed beef Tuesday indicates demand remains strong. The packers may increase slaughter to satisfy the demand.	1)	Traders may be wary of the same pattern of the past two Fridays and take profits on long positions ahead of time, rather than giving up recent profits.
2)	Feedlot may hold out for higher cash due to the strength of boxed beef, and the WASDE report showed feed prices will remain inexpensive.	2)	Cattle futures remain overbought, lending themselves to liquidation on any hint of negative news.
3)	Hog futures continue to hold support as there remains optimism over pork demand.	3)	Hog futures are choppy and unable to find sufficient support for a steady uptrend.
4)	Fund traders continue to hold a significant long position in hog futures and may add to those positions if futures continue to trend higher slowly.	4)	The significant decline in pork cutouts Tuesday suggests there has not been a substantial shift from beef to pork by consumers.

For our next livestock update, please visit our Midday Livestock comments between 11 a.m. and noon CST. Also, stay tuned to our Quick Takes throughout the day for periodic updates on the futures markets.

Robin Schmahl can be reached at rschmahl@agdairy.com

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